How do I use my credit card to build my credit? Never had one before.

[ThatSharpCrow]

So as an adult I've always had poor credit.
Made some stupid decisions in my early 20s. Got in over my head with catalogues when I was a SAHM with no income. Alot of debt, etc.

I'm now mid 30s. I had a CCJ but that's fallen off my file.

I've never had much credit. I couldn't even get a phone contract because I'm on disability benefits and don't work

My credit score in December was 550 and it's gone down to 350 since then! Absolutely no idea why.

I was advised many times to get a CC to build credit but even Vanquis wouldn't give me one.

I've been using klarna, clearpay, laybuy etc for years and have never, ever missed a payment.

80% of the time I repay early. Always on time.

I don't know if this helped but the other day I went on my credit checker and was pre approved for a 34.9% credit card.

Which I applied for and was approved, which baffles me as I've just dropped 200 points?!

I do not need this money. I have modest savings. I live a frugal life.

I just want to build my credit up so that some day I may be able to get back into work and have a good credit rating

So after being told for years to get a CC to sort my rating out, now that I have one what do I do with it?

The limit is 500.

So I will use and pay £100 each month.

@JodieFostersFurHood
I don't see the difference between putting your daily spends on your debit card or your credit card? They are the same daily spends.

I think there are lots of differences.

If you're living on benefits or otherwise low income, or even have a better income but high essential costs (rent or mortgage, childcare costs, commuting), putting daily spends - say, supermarket shopping, on your credit card can be tempting but you end up spending next week or next month's income before you get it. It can be hard to keep control. Better to know what's gone out of your current account and what is still to go. For me that is made worse by a dp who is terrible for overspending and living beyond his/our means, and we live on his wages plus some help from my very generous family.

The way interest is charged - OP's credit card has a very high APR as well - you apparently get lots of time before you have to pay it off, but then if I spent £100 in the supermarket last week, it will be on my statement in early March and I'll have until the end of March to pay it off, but if I only pay £50 of it off on March payday, I'll then be paying £6 weeks interest on that £50, and more on the remaining £50. In the following month I might have some of that balance and some interest on the interest.....

If I pay it on my debit card and then I go overdrawn 3 days before payday, I'll pay interest on how much I was overdrawn by for each of those 3 days. It's much less even though the apparent APR is actually higher than my credit card and even OP's card. Overdrafts do get more expensive if you're heavily overdrawn for most of the month. And the costs vary quite a lot. But for me sticking to the debit card esp for day to day spending is much better for budgeting and knowing where I am.

Don’t agree with that last part, sorry. Plenty of people pay bills on credit cards, mostly because they have reward credit cards that get them cashback etc.

Basically, it comes down to lenders seeing that you have an ability to borrow and pay it back on time. This means spending a bit of money on your credit card, then paying it all off on time, ie every month.

It’s just not bank loans and car finance to be considering off. It’s other things where you are also technically using credit. One example is your energy bill. If you move into a propery with a prepayment meter already installed, some energy companies will do a credit check on you if you want a normal billing meter. This is because you are using something (energy) before you pay for it. Therefore it is a credit agreement. They want to see you have the ability to pay for the energy you use.

Even if you are rich as shit, have paid off your mortgage, don’t need to use credit cards or borrow money, you still need to do something to build up your credit file, as it all comes down to you having proof you have the ability to pay back money that you borrow, which also needs behaviours to do this, not just money.

So another way to make sure your credit ratint is decent op is to ensure you pay your utility bills on time. Many people don’t realise utility companies report on your credit file.

Looking at my credit report I think using buy now pay later is a 'bad' flag. If you are regularly using klarna etc that may be why it's gone down.

I don't have klarna.

I've looked and clearpay and laybuy aren't on my credit file at all.

Only zilch and I think that's the reason I've been allowed to get the credit card. As it shoes I've been paying it back consistently for a year with no late payment and no charges.